KEN FORWARD ENGINEERING LTD. v. WELTIME HONG KONG LTD.

HCCT47/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO.47 OF 2002

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D E C I S I O N

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1. This application is for leave to file and serve a Notice of Originating Motion seeking leave to appeal an arbitration award dated 1 March 2002, out of time. The summons also seeks leave to appeal the award should an extension be granted.

2. The time limit for serving such a Notice is 21 days. It should therefore have been served by 25 March. In fact it was served on 14 May 2002, two days short of being eight weeks out of time. The sole reason for the delay given by the applicant was its impecuniosity. By affirmation it stated that it came into funds, so as to be able to pay the arbitrator's fees and collect the written award, on 9 April 2002. It was on that day that a cheque for approximately $1.7 million was cleared, being a sum awarded in their favour in other arbitration proceedings.

3. Further, analysis of this situation reveals the following. Firstly, the cheque for $1.7 million was in fact received on 3 April 2002. A further six weeks still elapsed before the applicant's notice of appeal was filed. No application for an extension of time was made neither at or around 25 March nor when they came into funds on 3 April. Secondly, the applicant's solicitors were in possession of the $1.7 million award in their favour from 7 March. In that case, $854,000 had been paid into court. They did not ask for the payment in to be paid out until 21 March 2002. When it was in fact paid out is not clear. In any event, it is clear that the applicant's impecuniosity could have been cured soon after 7 March. All this serves to demonstrate that the applicant's reason for delay rings somewhat hollow.

4. The court has a discretion to grant an extension of time. The discretion is unfettered but should nevertheless only be exercised in an applicant's favour with good cause. Keith J in Chiu Sin Chung v. Yu Yan Yan Angela (HCA4089/1991) reviewed a number of authorities and suggested a number of principles, including :

"(i) The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion. If the law were otherwise, a party in breach would have an unqualified right to an extension of time which would defeat the purpose of the rules, which is to provide a time table for the conduct of litigation.

(ii) Accordingly, the prerequisite of an application to extend time is a clear statement as to the reasons for the time limits not having been observed and for any delay in then applying for an extension.

(iii) 'Once the time for appealing has elapsed, the respondent who was successful in the court below is entitled to regard the judgment in his favour as being final. If he is to be deprived of this entitlement, it can only be on the basis of a discretionary balancing exercise, however blameless may be the delay on the part of the would-be appellant' : Norwich & Peterborough Building Society v. Steed [1991] 1 WLR 449 at p.454G.

(iv) The factors which are normally to be taken into account in that balancing exercise are (a) the length of the delay, (b) the reasons for the delay, (c) the chances of the appeal succeeding if an extension of time for appealing is granted, and (d) the degree of prejudice to the would-be respondent if the application for an extension is granted..."

5. The subject matter of the above authority was not an arbitration appeal. However, in two more recent decisions, concerning the same issue as before this court on this summons, the following statements have been made concerning the exercise of the court's direction.

6. Firstly, Leonard J in Carl International (HK) Ltd v. Ernst Komrowski & Co. [1996] 2 HKC p.491 :

"The application was made nearly four weeks after the expiry of the 21-day time limit. ... The reason given for the delay was that two of the applicant officers, whose authorization was required were absent, abroad on business. ... The excuses for delay were ... unacceptable. The court will look for strong and exceptional reasons for delay where a party seeking leave to appeal has failed to act within the time limit..."

7. Secondly, Rogers JA in Wong Pik Ling Kitty v. Crowe Insurance Group (HK) Ltd [2000] 1 HKC p.235 :

" The judge then exercised his discretion to condone the late filing of the application.

In my view, the judge erred in principle in relying on these matters as a basis for exercising his discretion to extend time. The fact that one party may not feel that a decision might not be in his favour or that he had little to gain from it other than costs is no ground for extending time to appeal when he subsequently finds out that his worst feelings might be right.

The fact that the award might be wrong in itself is not a ground on its own for extending time although it is, of course, a consideration to be taken into account.

In those circumstances, it then falls upon this court to exercise its own discretion.

Arbitration proceedings are quite separate from court proceedings. The point of them is that they are the choice of the parties. The matter is left to the parties and the arbitrator except in exceptional circumstances. The court only interferes in the outcome of arbitration proceedings in exceptional circumstances and certainly not just because the court might feel that the decision might be wrong."

8. Further criticism of an applicant who seeks leave to appeal out of time is found in the case of Kwan Lee Construction Co. Ltd v. Elevation Parts Engineering Co. Ltd [1997] 1 HKC in which Litton VP at page 109, remarked that "to sit back, waiting for the opposite party to pay the fees and obtain the award is not the best way to seek indulgence from the court". Ms T. Cheng, SC for the respondent, correctly points out that the applicant in our case is in the same position and merits the same criticism. (In the Kwan Lee case leave to file out of time was granted by a majority decision but the delay was only eight days and the ground of appeal "self evident")

9. With the above principles in mind, I have concluded that the application should be dismissed primarily because the reason for the delay has either not been made out at all or is insufficient.

10. I have also kept in mind the principle of finality in arbitration proceedings. Even to get leave to appeal an applicant faces an uphill task. As Rogers JA said (supra) "the courts only interfere in arbitration proceedings in exceptional cases". The notice of appeal in this case is very lengthy but is not one in which a clear arguable point of law is "self evident" as in the Kwan Lee case.

11. Had an extension of time been granted it would have amounted to a considerable indulgence by the court. If such an indulgence had been granted it would have been only just and proper to attach stringent conditions. In my judgment the applicant would have, at least, had to pay into court within seven days, a sum to secure the respondent's costs to the leave application, which have been estimated at approximately $700,000. Additionally, the court would have given very serious consideration to adding a condition that the sum awarded to the respondent in the arbitration, over $18 million, also be paid into court.

12. As it happens these considerations are academic, for two reasons. Firstly, because leave to file the Notice of Originating Motion is not being granted. Secondly, Mr Hingorani who appeared for the applicant, informed the court that the applicant is impecunious again, and would not be able to comply with such conditions.

13. Finally, I consider it appropriate to make the following observation. This case was put in the court's 9.30 a.m. list. It should not have been. The hearing took closer to two hours. Practitioners should be aware that the 9.30 a.m. list is for very short matters only such as time summonses, call overs, summons for directions and other largely uncontentious matters. It should not be used as a back door to get relatively short but nonetheless contentious issues an early date. In this instance, I do not lay blame on one particular side or the other. Apparently, the applicant was not aware that the respondent had briefed senior counsel to strenuously oppose the application in the 9.30 a.m. list. Mr Hingorani was only instructed during the morning of the hearing, after Miss Cheng had commenced her submissions. I therefore merely encourage solicitors to consult each other to discover the true nature and likely length of the hearing.

14. This application is dismissed with costs.

Remarks: